Kasich budget stalls as key GOP allies balk

Lawmakers resist tax, Medicaid proposals

COLUMBUS — The “bold” and “transformative” budget proposals Gov. John Kasich has been pushing have run into a brick wall — his fellow Republicans.

Gov. John Kasich's budget has few fans, even among Republican lawmakers.

There appears to be little chance his proposal to dramatically expand the sales tax base to numerous professional services will resemble what he proposed when a final budget reaches his desk by June 30.

His idea to hike severance taxes on the extraction of shale oil and natural gas in Ohio has never really gotten out of park in the General Assembly since he proposed it more than a year ago.

Those ideas — and his decision to partner with the Obama Administration to expand Medicaid under the federal health-care law — have drawn the ire of some in the conservative wing of his party.

“In recent months, Ohio has seen Governor John Kasich propose a ‘tax shift’ unfairly targeting certain landowners and creating a drag on energy exploration, recommend the expansion of a failing Medicaid program, and propose an increasing budget,” reads a statement issued this week by a group of conservative leaders.

The Toledo Bar Association last week joined the Ohio State Bar Association in specifically opposing the part taxing legal services.

The Medicaid expansion also divides the anti-abortion community. Ohio Right to Life supports the expansion while the splinter group Ohio Pro-Life Action has urged lawmakers to reject it.

“Ohio Pro-Life Action is concerned that Ohio not accept federal monies which are attached to anti-life policies and regulations, nor encourage the federal government to incur greater debt to fund this expansion of federal control over Ohio citizens and their health care decisions,” reads Pro-Life Action’s statement.

Ohio Right to Life, however, sees the expansion as an extension of its own mission.

“Governor Kasich’s proposal ensures that young, low-income women will now have access to a real doctor instead of some relying on Planned Parenthood,” said Mike Gonidakis, the organization’s president.

“Ohio Right to Life continues to identify innovative opportunities to reduce and ultimately eliminate abortion in Ohio,” he said. “By giving young women access to real health care and a primary care physician, we believe less and less women will view Planned Parenthood as their only option.”

The only part of the governor’s tax plan that remains popular with legislative Republicans is his proposed income tax cut. But killing or gutting the sales and severance tax sides of the equation puts in doubt whether the state could afford one, particularly the $1.4 billion over three years that Mr. Kasich has cited.

“We’ll see,” Kasich spokesman Rob Nichols said. “The important thing is the House and Senate are committed to lowering taxes. How we get there, we can deal with that. Ohio remains a high-tax state and that’s an obstacle to jobs.”

Under the intertwined elements of his plan:

● The sales tax base would be expanded to a long list of previously untaxed services such as cable TV, haircuts, accounting, legal services, and real estate and financial transaction fees. The state’s share of the sales tax rate would be cut half a penny to 5 cents on the dollar, but the overall plan represents a net gain in revenue to the state.

● Severance taxes on oil and natural gas drilling would be increased to take advantage of an anticipated shale drilling boom largely in eastern Ohio.

● Revenue from both would be used to fund a net $1.4 billion cut across the board in the personal income tax — a 20 percent cut for individuals over three years and an immediate 50 percent cut on the first $750,000 in profits for small businesses.

“We’ll see a sizable tax cut amid four other enormous policy items that are also likely to be enacted,” Mr. Nichols said. “The turnpike [borrowing plan] is already through. Higher ed is looking strong. K-12. Medicaid is tough, but we’re still engaged. Any one of those under another administration or General Assembly would be considered a massive lift.”

Lawmakers have begun their two-week spring break, but work will continue on the issues that majority Republicans have trouble with. There’s also some sentiment about increasing funding for schools and local governments beyond what Mr. Kasich has proposed.

House Speaker Bill Batchelder (R., Medina) said last week that members remain concerned about the number of school districts that would see no funding increases under the governor’s revamped formula.

“I think it’s absolutely solvable,” he said. “I don’t think it’s one of these overwhelming things. It’s not like Obamacare, for example. ... In addition to coloring eggs and other activities, we will be spending a lot of time next week in the conference room in my office working on the issue.”

Contact Jim Provance at: jprovance@theblade.com or 614-221-0496.

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